Tag: RSI trading strategy

I tested RSI + SUPERTREND Trading Strategy 100 TIMES… so you don’t have to

Post author By Trading Rush
Post date February 14, 2021

RSI supertrend trading strategies

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Does the RSI Supertrend Trading strategy even work? What will happen if you combine RSI indicator with the Supertrend Indicator? Will you make money in trading? To find out, I took 100 Trades with the RSI with Supertrend trading strategy, so you don’t have to. We tested the RSI and Supertrend strategies separately on the Trading Rush channel and they both had a profitable win rate. RSI strategy got a win rate around 49 percent with a 1.5 to 1 Reward Risk Ratio, and the Supertrend indicator on its own got an average win rate. To see the Supertrend trading strategy, check out the Supertrend strategy video on this channel.

When we tested the RSI indicator last time, we entered the trade when the RSI crossed below or above the 30 and 70 levels. When RSI value went above the 30 level, we bought. And when the RSI value went below the 70 level, we sold. On the other hand, with the supertrend indicator, we bought when the supertrend indicator indicated an uptrend, and sold when the supertrend indicator indicated a down trend.

This worked fine! Both trading strategies got a profitable win rate, and made money in the Trading Rush App. But if we want to combine RSI and Supertrend together to see what happens, we will have to modify the strategy a little bit.

You see, the supertrend indicator is showing the short term trend direction. And the RSI indicator is showing the oversold and overbought areas. But as some of you already know, RSI works good when the market is in a range. You can use it to trade the trend. But when the market is moving sideways, some traders sell and buy when the RSI value reaches overbought and oversold zones respectively.

But many times, when the price is moving in one direction, let’s say in an uptrend, the RSI will go above overbought 70 level, and many traders will see this as an increase in buying pressure. Similar thing applies when RSI value goes below the 30 level. Instead of buying, many traders will see the RSI crossing below the 30 level as an increase in selling pressure, and will sell instead of buying.

When we combine the RSI and Supertrend indicator, we buy, when the RSI crosses above the 70 level, only if the supertrend indicator is showing an uptrend. And we will sell when the RSI crosses below the 30 level, if the supertrend indicator is showing a down trend.

Subscribers of the Trading Rush channel probably noticed, that we are not using the 200 period moving average this time. Wouldn’t that affect the win rate, and the end result while comparing it with previously tested strategies? Well yes, but this time, we wanted to see what happens if we don’t use a moving average to find the trend, and use the supertrend indicator instead.

Since we are using the supertrend, in a long RSI and Supertrend setup, we can set the stop loss below it. And in a short setup, you can set the stop loss above the supertrend indicator.

Look at this example. The supertrend indicator is showing a short term uptrend, so we will only look for long entry signals. We wait for the RSI value to cross above the 70 level. When there is a buy signal, we enter the trade and set the stop loss below the supertrend indicator.

On this chart, the supertrend indicator is showing a downtrend, so we will only take short entry signals. We wait for the RSI to cross below the 30 level this time, and when that happens, we will take a short position and we will set the stop loss above the supertrend indicator. Simple as that.

So I tested the RSI with the supertrend indicator 100 times, and here’s what happened.

Number 1. As you can see the profit graph with the RSI and Supertrend strategy, shot up. The profit in the Trading Rush App went from 0 to around 2000 in just 20 trades. At the beginning it gave a lot of winning trades in a row. But then the profit line stopped going up, and started to go sideways. Between zero and 20th trade, it was like a rocket ship, but from 21st to around 60 trades, it was in a range. Then, the profit went almost straight down.

But Why is the Supertrend with RSI giving such a result? Well, while testing, I noticed that sometimes, RSI gives multiple signals in a short period of time. At the beginning, when the price was trending up, RSI with supertrend gave a lot of signals in a row, and almost all of them were won. That’s why you see a big upward move on the profit graph. When the trend was slow, or was changing directions frequently, some trades were won, some trades were lost. Then the price was going in the sideways direction. And after that, when price started trending strongly in one direction, multiple signals were taken in a short time period and won. But that’s not the only thing I found out.

Number 2. We used the Supertrend indicator to find the short term trend direction. But while testing 100 times, I found out that almost all buy RSI signals appeared when the Supertrend was showing an uptrend. And almost all sell signals appeared when supertrend was showing a down trend. In other words, when RSI crosses above the 70 level, the supertrend will most likely show an uptrend. And when RSI crosses below the 30 level, supertrend will most likely show a down trend. With this RSI and Supertrend strategy, supertrend was more of a stop loss indicator rather than a trend direction indicator.

After 100 trades, the RSI Supertrend trading strategy got an approximate win rate of 45 percent. The reward risk ratio was 1.5 to 1, and it got 8 winning trades in a row, but lost 12 trades in a row. So let’s give the RSI Supertrend strategy a TR score.

It gets a 5 out of ten in the Win Rate Category.

And gets a 6.5 out of 10 in the Easy to Use Category. All you have to do is look at the RSI value and set the stop loss below or above the supertrend line.

Even though the win rate was profitable in the Trading Rush App, there were a lot of signals taken in a short period of time. In reality, when you enter a trade, you are not going to take another trade, just a few candles after that. So in the Reliability category, it gets a 4 out of 10.

And even though the RSI Supertrend strategy made money in the end, the profit line went almost straight up at the start, went sideways for a while, and then went almost straight down. That is not as consistent as some other strategies we have seen on this channel. So in the consistent profits category, it gets a 4.5 out of 10.

When you combine the RSI and Supertrend indicator, the entry signals are generated in the direction of the trend. But while testing, I noticed that the supertrend trading strategy we tested 100 times, gave better quality signals on its own. So in the quality of the trades category, it gets a 6.3 out of 10 which is a bit less than the supertrend got on its own.

So the TR score is 26.3 out of 50. And the RSI Supertrend Trading Strategy ranks 15th from the top, just above the Stochastic indicator, and below the Bollinger Bands Trading Strategy.

So that’s all.

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Bollinger Bands + RSI Trading Strategy tested 100 TIMES – Will this make PROFIT for you?

Post author By Trading Rush
Post date October 25, 2020

bollinger bands RSI trading strategy

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Can you make money with the RSI and Bollinger Bands trading strategy? No not with RSI and Bollinger bands separately, because I have already tested the Bollinger bands indicator and the RSI trading strategy 100 times, they both had a profitable win rate. With a reward to risk ratio of 1.5 to 1, Bollinger bands had a win rate of approximately 55 percent, and the RSI had a win rate of approximately 49 percent. But what if we combine these two trading indicators, will the win rate go up? Well, why don’t we find out. In this video, I’m going to test the Bollinger bands RSI trading strategy 100 times, to find its approximate win rate.

In the RSI strategy that had a profitable win rate, the long entry signals were taken, when the RSI crosses above the 30 level. And short entry signals were taken when the RSI line crosses below the 70 level.

In the Bollinger Bands strategy that also had a profitable win rate, buy entry signals were taken, when a buy candlestick pattern is formed after price crossed below the lower bollinger band. And sell signals were taken when a sell candlestick pattern is formed after price crossed above the upper bollinger band. Furthermore, a 200 period moving average was used to find the direction of the long term trend.

But when you combine these two trading strategies, things become a little bit different. In the Bollinger Bands RSI strategy, a buy entry signal is at the first candle that closes above the middle bollinger band, soon after RSI was over sold. RSI value below 30 is considered to be over sold. Furthermore, a good portion of the candle has to close above the middle bollinger band, a slight touch will be considered as invalid.

Similarly, a sell entry signal is at the first candle that closes below the middle bollinger band, soon after RSI was over bought. RSI value above 70 is considered as over bought. And, a good portion of the candle has to close below the middle bollinger band.

For example, in this long setup, the RSI went oversold, then the price made a move up. Your entry is at the first candle that closes above the middle Bollinger band. You can set the stoploss below the lower bollinger band.

In this short setup, the RSI went above 70, then price made a move down. Your entry is at candle that closes below the middle bollinger band. Stoploss goes above the upper bollinger band.

Now you might be thinking, what’s the point of using the Bollinger bands with the RSI indicator? Well, some people like to combine these two indicators to filter some of the false signals. Remember, RSI on its own was a profitable strategy. So when you use it with the bollinger bands, you are filtering some of the false signals that bollinger bands gives in some conditions. Bollinger Bands on its own was also a profitable strategy, but in the bollinger bands strategy video, we used it as a trend following indicator with the help of a 200 period moving average. When you combine the bollinger bands with the RSI indicator however, you cannot use the 200 period moving average to find the trend direction, because this strategy doesn’t give a lot of entry signals when used with a 200 period moving average. In other words, Bollinger Bands RSI strategy, is a reversal trading strategy.

We have tested most indicators on the Trading Rush channel in the direction of the trend, and because of that, many indicators performed really well. Since Bollinger Bands RSI strategy is not exactly a long term trend following strategy, will it perform any good after testing 100 times? Well, I tested it 100 times and here are the results.

Number 1. When we took 100 trades with the Bollinger bands strategy, the strategy was successful in the long run, because we traded in the direction of the trend and took trades at the end of a pullback. We also had a relatively smaller stoploss. When an entry signal according to the bollinger bands strategy was wrong, the trade was lost quickly because the stoploss that was set according to the bollinger bands strategy was small. But when price made a decent move in our favor, the profit was booked with 1.5 times more than the potential loss.

RSI strategy on its own was also profitable, because the stoploss that was set according to the RSI trading strategy was small and the reward risk ratio was good.

In the Bollinger Bands RSI strategy however, the stoploss is relatively bigger. So price has to make a really good move for the trade to achieve a good reward risk ratio.

So in other words, the things that made the Bollinger Band and the RSI strategy profitable on their own, are different in this strategy.

For example, in this buy setup, the entry according to the Bollinger Bands RSI strategy, is at the first candle that closed above the middle Bollinger band, after RSI crossed above the 30 level. Stoploss is below the lower Bollinger band.

Now, according to the RSI strategy, entry is right here when RSI line crossed above 30.

As you can see, RSI combined with bollinger bands strategy gives a late signal when compared to the signals RSI gives on its own. Late entry is not a big problem if the trade is taken in the direction of the long term trend, because price usually makes a big move in the direction of the trend. But as you already know, Bollinger Bands RSI strategy is not a trend following strategy. If you try to use the 200 period moving average, it won’t give a lot of entry signals. and because of this, the Bollinger Bands RSI strategy gives a lot of false signals. When the market was moving sideways and was in a big range, the strategy was performing ok. But when market started trending, and since this strategy doesn’t filter false signals in a trend like other strategies do, this trading strategy had a lot of losing trades in a row, when compared to other strategies we have tested on this channel.

You can use your own way of setting the stoploss and profit target to improve this strategy. Just remember that your results can be different if you use different entry and stoploss conditions. So remember to backtest your trading strategy before using it in the liive markets. You can use the Official Trading Rush App to do that. RSI when combined with the Bollinger Bands like this, doesn’t give a profitable win rate that you can make money with in the long run.

In fact, after 100 trades, the profit graph in the Trading Rush app didn’t go up. With a reward risk ratio of 1.5 to 1, the win rate of the Bollinger Bands RSI strategy I got in this backtest, was approximately 35 percent. This is one of the worst win rates we have gotten so far. There are strategies on the Trading Rush Channel that gave approximate win rates more than 55 percent. The profit graph also looks like a downtrend. At one point, this strategy gave 11 false signals in a row. RSI and Bollinger Bands on their own had better win rates than this.

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EXTREME RSI Trading Strategy – I tested 100 TIMES to see if it is better than the RSI Strategies

Post author By Trading Rush
Post date September 24, 2020

Connors RSI Trading Strategy

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Tag: RSI trading strategy

Does the RSI Trading Strategy work? If yes, what is the win rate of the RSI Indicator? Well if you have been following the Trading Rush Channel for a while, you already know if the RSI Strategy works or not, that’s because we have tested it 100 times to find its win rate. But similar to the RSI indicator, there is a new and interesting indicator called the Connors RSI indicator. Does this Connors RSI indicator work? If yes, will it make you more money than the normal RSI trading strategy? In this video, I’m going to test the Connors RSI trading strategy 100 times to find it’s win rate. If you are watching the Trading Rush Channel for the first time, subscribe to the channel, because we test and have tested many different Trading Strategies 100 times to find their win rates. After all, you don’t want to risk your money on a Trading Strategy that doesn’t even work.

The original RSI indicator was developed by J. Welles Wilder, Connors RSI on the other hand is made by Larry Connors, but heavily relies on the work of J. Welles Wilder. On Trading View, this is how the Connors RSI indicator looks like. Unlike the RSI indicator, the Connors RSI has three components called the RSI, Up Down Length, and the Rate of Change. You can say that the Connors RSI is more of a tool, that is based on the RSI indicator. If it is a good thing or not, we will find that after we test it 100 times.

Just like the RSI indicator, the Connors RSI also ranges from 0 to 100, but in this indicator, the RSI line is called the CRSI line. Now the original RSI indicator came with the default over bought and over sold levels of 70 and 30 respectively. On Trading View, the Connors RSI also comes with the default levels of 70 and 30, but the creator of the Indicator Larry Connors, doesn’t recommend using those levels. Instead, Connors recommends using the 90 and 10 as the over bought and over sold levels. Furthermore, Conner also mentions that the higher the CRSI value goes above the 90 level, the higher is the chance of making a big profit. Similarly, the lower the CRSI value goes below 10, the higher is the probability of price making a big move in the entry direction.

Here’s how the Connors RSI Trading Strategy goes.

If you have watched other Trading strategy videos on the Trading Rush Channel, you know I always recommend using the 200 period moving average to find the long term trend. Well, guess what. Larry Connors also recommends using the 200 period moving average with the Connors RSI trading strategy. So in this video, we don’t have to modify the CRSI Trading Strategy at all, because it already uses the false signal filters just like we do on this channel.

So the buy signal, is when the price and the candle is completely above the 200 period moving average, and the CRSI is coming out of the over sold zone, which is 10 and below.

Similarly, the sell signal is when the price and the candle is completely below the 200 period moving average, and the CRSI is coming out of the over bought zone, which is 90 and above.

Now I have seen many people recommending not using a stoploss with this strategy. But if you have watched my video where I took 100 trades with stoploss and without stoploss, you know not using a stoploss is a very bad idea, especially if you are a new trader. If you haven’t watched that 100 trades Stoploss vs No Stoploss video, go watch now to see what can happen to your account balance if you don’t use a stoploss in trading.

Since the Connors RSI gives many signals in a shorter amount of time, while backtesting, In the long setup, I have set the stoploss slightly below the pullback. Similarly, in a short setup, I have set the stoploss slightly above the pullback.

With the default CRSI settings, I have tested the Connors RSI Trading Strategy 100 times, and here’s what happened.

Number 1. Unlike the original Relative strength index, the Connors Relative strength index gives a lot of entry signals. Since it already uses a 200 period moving average to filter false signals, some losing trades were avoided. The Connors RSI trading strategy was tested 100 times with the help of the Trading Rush App. You should test your Trading Strategy with the Official Trading Rush App as well. It saves a lot of time while backtesting a strategy because it calculates the profit graph, the win rate, and other useful data in just one click. Download it now from the Play Store or using the link in the description.

As you can see in the Trading Rush App, the profit graph goes up at the start because the entry signals given by the Connors RSI strategy were working. Price was reversing after reaching the over bought and over sold zones.

Number 2. While backtesting, the entry signals that were right, sometimes had a very high profit potential. If you are a trader that trails the stoploss to catch the big move, you can make a big profit when the Connors RSI gives a correct entry signal. But as you already know, trailing a stoploss requires a good amount of patience and emotional discipline. If you are a new trader, it is a good idea to stick to the fixed profit and stoploss orders to take advantage of the consistent profits.

Number 3. Since I have used the 1.5 to 1 reward risk ratio while testing other strategies 100 times, I have used the same reward to risk ratio here as well. But while backtesting, I noticed that the Connors RSI was giving entry signals that were too early. When the entry signal was right, the 1.5 times profit target was easily achieved because the stoploss was very small. But because of the way to early entry signals, the stoploss was easily hit most of the time. The Connors RSI trading strategy simply gives a lot of entry signals that are way to early than the actual price reversal.

So, after testing the Connors RSI trading strategy 100 times, I got the win rate of approximately 39 percent. Which is to be honest, is one of the worst win rate we have gotten in the strategies tested 100 times series. If you look at the profit graph in the Trading Rush App, you will notice that the profit line doesn’t appear to be going in one way like some of the other strategies we have seen on this channel. It looks more like the trades were taken randomly. For example, if we compare it with the Profit graph of the simple moving average crossover strategy, you can tell that the strategies like the SMA crossover gives way better and consistent profit than this. In the backtest, I lost 7 trades in a row, and won 4 in a row. The starting balance was 10000, and at one point the account balance was up by 850, but then everything came down as I took more trades. At the end, the account in the Trading Rush App was down by 250. The original RSI trading strategy that we tested 100 times, had way better win rate than this. So it is a good idea to stick with the regular RSI trading strategy, instead of risking your money on this thing.

That’s all. Now you know more about the Connors RSI trading strategy. Like the video if you liked it. Subscribe and ring that notification bell to see more trading strategies tested 100 times. After all, you don’t want to use a strategy that does not work at all. Download the Official Trading Rush App using the link in the description, and thanks to all the amazing Patrons who support the Trading Rush Channel on Patreon. You make these videos possible.